Comparing Capitalism and Parecon

Comparing Capitalism & ParEcon Decision Making

An economy begins in an amorphous condition of huge possibilities for what is to be produced, in what quantities, by what methods, with what actors doing what tasks at what pace, and with what amounts of output going to whom. From an amorphous mass of possibilities emerges a particular set of choices yielding particular outcomes for all actors. Sometimes institutional pressures coerce outcomes regardless of anyone’s preferences. In capitalist economies, markets and corporate structure compel competition, pursuit of profit, reproduction of class relations, etc., whereas in a parecon participatory planning and adherence to council organization and self management delimit options. In both types of economy, however, countless decisions are made self-consciously by various actors, and this page briefly compares the two systems regarding workplace decisions.

Next Entry: Comparing Regarding Class Relations


“The Triumph of Death”
by Pieter Bruegel


“The Dance”
by Henri Matisse

Introducing Capitalist Decision Making

The criteria for who makes decisions in capitalism  is quite simple…if you have the authority and power, you make them, if not, you obey choices made by others.

Authority and power arise, in capitalism, from one primary logic which stands on two major legs. The primary logic is bargaining power in the form of coercive capacity. Do you have the strength to impose your will?

The two main bases for such power are ownership of property which conveys a large measure of control over all decisions bearing on the property’s use, and bargaining power in negotiations over disputed priorities, which arises from all manner of factors, such as special monopolized talents or knowledge, organizational strength, social attributes like gender and race, and so on.

The structural embodiment of the prime norm s is the corporation and autocratic decision making.

For most participants (the workers) the corporate structure is a dictatorship regarding most facets of their daily economic lives. The corporation is run ultimately by owners, but administered by what we call the coordinator class. Workers obey orders that come from above arrived at without their input, or they resist.

The result is that some people are able to make decisions, often unilaterally, that have tremendous impact on the lives and circumstances of huge numbers of other people, who are excluded from having a say.

The owners of a plant decide to change its technology affecting the conditions of labor of everyone employed, or decide to move it, or to close it, un-employing thousands, and perhaps even destroying a whole town or region. The manager of a division changes the pace of work affecting the daily circumstances and even the health of hundreds or thousands of workers who must simply abide the choice. And so on.

Power in capitalism therefore flows from owning productive property, monopolizing access to decision making levers and information, monopolizing valuable skills and talents, and broader social factors (such as gender and race) as well as organizational strength (such as unions or professional organizations), and is limited only by the impositions of markets and other capitalist institutions that constrain the range of available options that people choose among, or propel some options (such as profit-seeking) above others.

Introducing ParEcon Decision Making

The operating criteria for who makes decisions in a parecon is that those affected have a say or influence proportionate to the degree they are affected. This norm is called participatory self management. It is participatory in that every actor is treated identically and welcomed into decision making by the norm. It is self managing in that every actor has control over what impacts them in the same amount and manner as every other actor. Power arises purely from one’s position with respect to the implications of decisions and is proportionate to how much one is affected. An individual may of course be respected for the cogency of their views, or for their prior accuracy in assessing and evaluating circumstances, but this doesn’t convey extra decision making power. It influences outcomes only insofar as others are freely convinced, in turn.

The structural embodiment of the self managing norm of parecon is council organization of production and consumption, plus flexible decision making procedures contoured to circumstances. Sometimes one person one vote majority rule makes sense. Often, however, other norms such as a two thirds majority or even consensus make sense. Many decisions overwhelmingly affect only one person, or only a particular group, and those constituencies are then afforded much greater power over the relevant choices.

You have greater power in deciding if you want a new bicycle, but not sole say — because this decision affects, as well, producers of bicycles and other citizens by virtue of using some of society’s productive capacity. You have greater power over deciding what is on your desk, and your work team has greater power arranging its daily schedule and your work place has greater power in determining its division of labor, and so on — but all economic decisions are interconnected, with many variables at stake and effects emanating in many directions.

The claim of parecon is that decision making input is apportioned in proportion to degree affected by virtue of the operations of workers and consumers councils, balanced job complexes (creating the conditions necessary to participation), and self managed decision making algorithms of voting. The claim’s veracity depends on the logic of participatory planning, but the attainment of the claim regarding workplace decisions in respect to relative impact on workers in the workplace, ought to be evident.

Evaluating Capitalist Decision Making

The only way to evaluation a decision making situation is to have some norm against which to judge it. If the norm is that the most powerful ought to decide with power being rooted in diverse traits and factors, but primarily property ownership and monopolization of access to critical information and levers of choice, then capitalism is fine since it accomplishes precisely that.

If, however, the norm we aspire to is that each individual should impact the decisions that affect them in proportion to the degree they are affected…then capitalism fails miserably because in capitalism it is a complete accident if a person has this level of impact and in almost all cases a few people will have vastly more impact than is appropriate by this norm and nearly all people will have way less. Even lesser norms — everyone having some say, or having equal say, for example — are horribly violated. Corporations, after all, are dictatorships of the very few over the great many regarding employee’s daily economic life at work.

But is there a mitigating aim that justifies capitalism’s divergence from proportionate input for all in decision-making?

The case is offered that some can make decisions better than others, and ought to be, on that account, welcomed to do so. They are expert repositories of greater knowledge, and so should have greater prerogative — in the interests of everyone.

There are two problems.

First, supposing it were true, most well meaning people would not accept that it is a justification for authoritarian decision making. The value that everyone has a right to influence outcomes is the whole point of democracy, or, in our case, participatory self management. It is a higher aim than optimal decision making. If Fidel Castro can make better decisions than anyone else, we don’t on that account assert that he should make all decisions, of course.

Second, the assertion is completely false, or rather misconceived. For experts in the sense meant here to be given disproportionate decision-making power will not, in fact, lead to better decisions.

Why not?

Well, who is in fact the world’s foremost expert, bar none, on your tastes and preferences? You are, of course. No one else. So if we say that knowledge matters, as it of course does, than we have to in fact honor your premier knowledge of your own preferences and let that knowledge be manifest to the proper extent — which can only occur if you have proportionate decision-making input.

But what about the chemical or biological or engineering expert’s knowledge?

Take an example. We have an expert in the effects of lead paint. Does she decide whether I use lead paint on my back railing or perhaps whether all of society bans lead paint, all by herself? No. No one thinks that makes sense. Instead, everyone agrees that the expert conveys the relevant knowledge and then the affected actors, with the relevant knowledge, make their choice. This logic is not the exception, but ought to be the rule.

Evaluating ParEcon Decision Making

By the norm of each actor impacting decisions in proportion as they are affected by them — parecon succeeds admirably, not surprisingly since accomplishing this as its basic purpose. By other norms that favor allotting significantly more or less than this amount of input to some actors, parecon fails. Is there a hidden problem with this norm, even if we highly value participatory self-management as a moral goal?

Well, there would be, of course, if the resultant decisions were consistently worse than we could have attained by other approaches in such a manner as to outweigh the benefits that accrue from participation and self management.

But, in fact, there is no loss and is instead actually a gain in quality of decisions the closer to participatory self management we get, without, of course, wasting time seeking perfect compliance. Why?


(a) This approach utilizes and calls forth full self development from all actors. We each will be fully involved participants, not only in rote and tedious labor, but in making decisions. We each ought to be educated, therefore, to our fullest potentials, rather than dumbed down by restrictive schooling to fit obedient slots waiting for us in corporate structures. The implications for education, in other words, are positive.

(b) In each decision each actor best knows their own preferences and is in position to manifest them to the proper degree. If some actors have more than proportionate say and some less, then a proper outcome depends not only on the largesse of those with more say respecting the impact on the others and moderating their pursuit of self advance in accord, but also on their actually knowing how to do this, knowing what others want as much as others know themselves. On all counts this is highly unlikely.

(c) Not only does this approach not disdain the application of the best possible knowledge to complex decision making, it produces no obstacles to achieving that sensible aim — unlike other approaches which give narrow sectors of people a special interest in keeping knowledge to themselves as a means of private advance and power.

The examples and discussion in the adjacent cell, to the left, make the point more concretely.

 Next Entry: Comparing Regarding Class Relations  


All the latest from Z, directly to your inbox.

Institute for Social and Cultural Communications, Inc. is a 501(c)3 non-profit.

Our EIN# is #22-2959506. Your donation is tax-deductible to the extent allowable by law.

We do not accept funding from advertising or corporate sponsors.  We rely on donors like you to do our work.

ZNetwork: Left News, Analysis, Vision & Strategy


All the latest from Z, directly to your inbox.